Target plan to chop unprofitable stores

businesses. Target operates 305 stores across Australia with half of those running at a loss over the past two financial years, Mr Russo said.

Mr Russo said he was focused on store space – not store numbers – but said he would not renew leases on loss-making stores as they expired over the next five years.

“When a lease comes up … it would be at that point I would close a store,” he told a Wesfarmer’s investor strategy day this morning.

“We called it space instead of store numbers because I don’t want to allude to the fact that I’m just shutting down small stores.”

Mr Russo said Target had loss-making stores which ranged from 1000 sqm to 9000 sqm in size located in both city and country locations.

“It’s a collection of small, medium and large,” he said of the stores facing closure.

Mr Russo said Wesfarmers would seek to offer impacted Target staff new jobs across the conglomerate’s other retail brands. But he noted this would not be possible in some country areas.

“We have a lot of high sensitivity of not only our team members in those small country towns but also to the local community where Target has been there for decades,” he said.

Mr Russo – who built Kmart into the discount department store category heavyweight – said half of Target’s stores had run at a loss over the 2016 and 2017 financial years.

He said “half the fleet could be unprofitable” but noted turnaround efforts were set to show up in Target’s upcoming full-year results.

Coles chief John Durkan told the strategy day the supermarket chain wants 40 per cent of all products it sells to be its own label within five years.

Mr Durkan said Coles was working to build an “own brand powerhouse” with the goal of having 40 per cent sales penetration of its private label range by 2023.

But he said the push would not reduce customer choice.